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According to a study published last week in the journal Science, fish that swim in water with similar levels of anti-anxiety drugs found in streams and rivers near populated areas in Sweden tend to lose their inhibitions and go off on their own, gobbling up other fish at a faster rate.

It seems even after psychiatric medications pass through the body, traces find their way into waterways, slipping past waste-treatment plants. Researchers found "unusually high" levels of oxazepam in a river that flows through Uppsala, Sweden's fourth-largest city, but added they weren't out of line with levels found in rivers in other countries.

Researchers found in experiments that perch exposed to oxazepam went off on their own instead of staying with schools that protect them from predators. The medicated fish became bigger risk takers, venturing into unfamiliar environments more willingly, and became "much greedier and more efficient feeders" than their drug-free counterparts. The problem is that drugged fish could wipe out other beneficial species, such as algae-eating fish, or their own risk behavior could make them more vulnerable to predators.

Now, oxazepam is a benzodiazepine, a class of medications that includes better-known names such as Xanax, which is popped like Pez in urban centers far bigger (and presumably more stressful) than Uppsala. That would include the environs of Wall Street all the way up to midtown Manhattan; and while I can't vouch for greater usage of anti-anxiety medications among those in the financial markets, it would be surprising if it were less.

The vision of medicated fish gobbling up prey brought to mind the spate of mergers and acquisitions announced in the week past. It isn't the first time the hypothesis that the prevalent use of psychiatric pharmaceuticals may be influencing financial-market activity. Indeed, it was proffered in these pages years ago ("Prozac Notion," March 13, 2000), which suggested antidepressants were helping inflate the dot-com bubble, which was just about to burst.

Berkshire's 50-50 investment in Heinz -- in which it will put up $4 billion plus $8 billion for which it which it will receive preferred shares yielding a whopping 9% -- will barely put a dent in the $48 billion cash hoard CEO Warren Buffett has amassed for his famous hunt for "elephants" -- acquisitions big enough to matter to the conglomerate.

What's most striking about the spate of deals is how they are all about consolidation, not innovation. And that, while they hardly hold out exciting prospects, the combinations at least provide yields greater than the tiny fraction of a percent generated by the cash on the companies' balance sheets. Or more to the point, they're boring. How exciting can ketchup be?

In that regard, it's less surprising Apple's share price has swooned from over $700 last September to the mid-400s after the introductions of the iPhone 5 and the iPad mini fell short of the next big thing. And the discussion among investors has turned to what to do with its $137 billion cache of liquid securities.

David P. Goldman, the polymath who runs Macrostrategy, an economic consultancy, after having led Bank of America's credit research, agrees that American innovation has been threadbare in recent years but disagrees with Gordon that it's our fate.

"In our view, a combination of bad policy and happenstance are to blame," he wrote in a recent commentary. "A decade ago, everyone dropped what they were doing and joined the gold rush. The financial boom of the 2000s squandered America's best talent on the high returns available in derivatives markets. The smartest engineers and physicists got Wall Street jobs. The financial crash followed by the Obama administration's response further depressed risk-taking."

That leaves all that excess cash earning nothing (and losing value in real terms) nowhere to go but to pursue deals. Even with a recent backup in the high-yield bond market, liquidity is abundant, especially in the leveraged-loan market. Corporations have ample productive capacity to meet demand, so better to combine with competitors and eliminate any excess rather than invest in new capital.

But ultimately, it is the excess liquidity that's spurring these deals. That's even without being spiked by mind-altering pharmaceuticals.

Even before the burst of deal making late last week, there was a sense of having seen this movie before. Barron's Roundtable stalwart Fred Hickey admits to recycling the title of his latest "High Tech Strategist" monthly, "Up It Goes, Until It Blows," one more time. The first was in December 1999, just before the Nasdaq Composite hit a never-to-be revisited 5,000, or just 2,000 or so points above Friday's close. The other was in June 2007, a few months before the broad market's peak the following October. Fred continues to warn about the consequences of global central-bank money-printing. "It created a tech bubble, a housing bubble, a credit bubble, Bear Stearns, and Lehman. Now we're in the midst of a bond bubble and possibly another stock-market craze," he wrote ahead of last week's events.

Similarly, veteran market watcher John Mendelson, now with International Strategy & Investment Group, describes the equity market as "about as extended as in the case of major tops in 2007 and 2000." Ironically, the market's surge has been the result of the lack of liquidity in the stock market itself. In other words, the influx of cash hasn't had a counterpart on the other side to stabilize prices. "First, there was the demise of the NYSE specialists who were required to stabilize -- buy on minus ticks/sell on plus ticks," he writes. "Decimalization and other regulatory decisions killed them…if you see the picture of the NYSE Floor on TV, there is nobody there except TV people, you could play touch football down there."

In addition, the pullback from block trading and the Volcker Rule's curbs on "Prop Trading" also diminish the money available from the Street to take the other side of a trade "if they thought they could make money," he says. So far, Mendelson points out, the illiquidity has been on the upside, and human nature being what it is, nobody complains about that. We haven't seen the same illiquidity on the downside, he adds.

Yet the divide between what's happening on Wall Street and Main Street appears ominously wide. Friday, Bloomberg got hold of a memo from a
Wal-Mart Stores wmt -0.33927056827820185%Wal-Mart Stores Inc.U.S.: NYSEUSD82.25
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5431414AFTER HOURSUSD82.253
0.003000000000000110.00364741641337386%
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16.222879684418146Market Cap
266009861929.7
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2.382978723404255% Rev. per Employee
220750More quote details and news »wmtinYour ValueYour ChangeShort position
(WMT) executive that called the current month's sales "a total disaster." The reality of the impact of the hike in payroll-tax withholdings, along with a renewed rise in gasoline prices and continued tepid employment growth apparently contributed to what the exec deemed "the worst start to a month I have seen in my ~7 years with the company." Wal-Mart's shares ended down over 2% Friday, dragging down other retailers with them.

Meanwhile, the federal government seems headed toward sequestration on March 1, which would ax another $85 billion in spending cuts from the economy. And as Greg Valliere, chief political strategist at the Potomac Research Group, observed after the State of the Union Address last Tuesday, even though President Obama asserted the American public is tired of "manufactured crises," no progress is apparent in forestalling the sequestration cuts. But none of this seems to stand in the way of liquidity-driven deal-making.